Clarification on Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members.

Circular No.109/28/2019- GST dated 22nd July, 2019

S.N	Issue	Clarification
1	Are the maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society exempt from GST and if yes, is there an upper limit on the amount of such charges for the exemption to be available?	Supply of service by RWA (unincorporated body or a non- profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST. Prior to 25th January 2018, the exemption was available if the charges or share of contribution did not exceed Rs 5000/- per month per member. The limit was increased to Rs. 7500/- per month per member with effect from 25th January 2018. [Refer clause (c) of Sl. No. 77 to the notification No. 12/2018- Central Tax (Rate) dated 28.06.2019]
2	A RWA has aggregate turnover of Rs.20 lakh or less in a financial year. Is it required to take registration and pay GST on maintenance charges if the amount of such charges is more than Rs. 7500/- per month per member?	No. If aggregate turnover of an RWA does not exceed Rs.20 Lakh in a financial year, it shall not be required to take registration and pay GST even if the amount of maintenance charges exceeds Rs. 7500/- per month per member. RWA shall be required to pay GST on monthly subscription/ contribution charged from its members, only if such subscription is more than Rs. 7500/- per month per member and the annual aggregate turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more.
		Annual turnover of RWA	Monthly maintenance charge	Whether exempt?
		More than Rs. 20 lakhs	More than Rs. 7500/-	No
			Rs. 7500/- or less	Yes
		Rs. 20 lakhs or less	More than Rs. 7500/-	Yes
			Rs. 7500/- or less	Yes
3	Is the RWA entitled to take input tax credit of GST paid on input and services used by it for making supplies to its members and use such ITC for discharge of GST liability on such supplies where the amount charged for such supplies is more than Rs. 7,500/- per month per member?	RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services
4	Where a person owns two or more flats in the housing society or residential complex, whether the ceiling of Rs. 7500/- per month per member on the maintenance for the exemption to be available shall be applied per residential apartment or per person?	As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the RWA for each residential apartment owned by him separately. The ceiling of Rs. 7500/- per month per member shall be applied separately for each residential apartment owned by him. For example, if a person owns two residential apartments in a residential complex and pays Rs. 15000/- per month as maintenance charges towards maintenance of each apartment to the RWA (Rs. 7500/- per month in respect of each residential apartment), the exemption from GST shall be available to each apartment.
5	How should the RWA calculate GST payable where the maintenance charges exceed Rs. 7500/- per month per member? Is the GST payable only on the amount exceeding Rs. 7500/- or on the entire amount of maintenance charges?	The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exceed Rs. 7500/- per month per member. In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable. For example, if the maintenance charges are Rs. 9000/- per month per member, GST @18% shall be payable on the entire amount of Rs. 9000/- and not on [Rs. 9000 - Rs. 7500] = Rs. 1500/-.

E-Way Bill Tool

Check requirement to generate E-way bill when supply of goods involves movement of goods

           https://gst.taxmann.com/eway-bill-tool.aspx

GST Rate Finder

        https://gst.taxmann.com/gst-rate-finder.aspx

Place of Supply

      https://gst.taxmann.com/place-of-supply.aspx

Circular No. 107/26/2019-GST

                                                 Circular No. 107/26/2019-GST

Clarification on doubts related to supply of Information Technology enabled Services (ITeS services) - reg. 

1.Various representations have been received seeking clarification on issues related to supply of Information Technology enabled Services (hereinafter referred to as “ITeS services”) such as call center, business process outsourcing services, etc. and “Intermediaries” to overseas entities under GST law and whether they qualify to be “export of services” or otherwise.

2. The matter has been examined. In view of the difficulties being faced by the trade and industry and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issues in succeeding paragraphs. 

3. The intermediary has been defined in the sub-section (13) of section 2 of the Integrated Goods and Service Tax Act, 2017 (hereinafter referred to as “IGST” Act) as under - 

    "Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account."

3.1 The definition of intermediary inter alia provides specific exclusion of a person i.e. that of a person who supplies such goods or services or both or securities on his own account. Therefore, the supplier of services would not be treated as „intermediary‟ even where the supplier of services qualifies to be „an agent/ broker or any other person‟ if he is involved in the supply of services on his own account. 

4. Information Technology enabled Services (ITeS services), though not defined under the GST law, have been defined under the sub-rule (e) of rule 10 TA of the Income-tax Rules, 1962 which pertains to Safe Harbour Rules for international transactions. It defines ITeS services as- 

"information technology enabled services" means the following business process outsourcing services provided mainly with the assistance or use of information technology, namely:—

(i) back office operations; 

(ii) call centres or contact centre services; 

(iii) data processing and data mining; 

(iv) insurance claim processing; 

(v) legal databases; 

(vi) creation and maintenance of medical transcription excluding medical advice; 

(vii) translation services; 

(viii) payroll; 

(ix) remote maintenance; 

(x) revenue accounting; 

(xi) support centres; 

(xii) website services; 

(xiii) data search integration and analysis; 

(xiv) remote education excluding education content development; or 

(xv) clinical database management services excluding clinical trials, 

but does not include any research and development services whether or not in the nature of contract research and development services.

5. There may be various possible scenarios when a supplier of ITeS services located in India supplies services for and on behalf of a client located abroad. These scenarios have been examined and are being discussed in detail hereunder: 

5.1 Scenario -I: The supplier of ITeS services supplies back end services as listed in para 4 above. In such a scenario, the supplier will not fall under the ambit of intermediary under sub-section (13) of section 2 of the IGST Act where these services are provided on his own account by such supplier. Even where a supplier supplies ITeS services to customers of his clients on clients behalf, but actually supplies these services on his own account, the supplier will not be categorized as intermediary. In other words, a supplier “A” supplying services, listed in para 4 above, on his own account to his client “B” or to the customer “C” of his client would not be intermediary in terms of sub-section (13) of section 2 of the IGST Act. 

5.2 Scenario -II: The supplier of backend services located in India arranges or facilitates the supply of goods or services or both by the client located abroad to the customers of client. Such backend services may include support services, during pre-delivery, delivery and postdelivery of supply (such as order placement and delivery and logistical support, obtaining relevant Government clearances, transportation of goods, post-sales support and other services, etc.). The supplier of such services will fall under the ambit of intermediary under sub-section (13) of section 2 of the IGST Act as these services are merely for arranging or facilitating the supply of goods or services or both between two or more persons. In other words, a supplier “A” supplying backend services as mentioned in this scenario to the customer “C” of his client “B” would be intermediary in terms of sub-section (13) of section 2 of the IGST Act.

5.3 Scenario –III: The supplier of ITeS services supplies back end services, as listed in para 4 above, on his own account along with arranging or facilitating the supply of various support services during pre-delivery, delivery and post-delivery of supply for and on behalf of the client located abroad. In this case, the supplier is supplying two set of services, namely ITeS services and various support services to his client or to the customer of the client. Whether the supplier of such services would fall under the ambit of intermediary under sub-section (13) of section 2 of the IGST Act will depend on the facts and circumstances of each case. In other words, whether a supplier “A” supplying services listed in para 4 above as well as support services listed in Scenario -II above to his client “B” and / or to the customer “C” of his client is intermediary or not in terms of sub-section (13) of section 2 of the IGST Act would have to be determined in facts and circumstances of each case and would be determined keeping in view which set of services is the principal / main supply.

6. It is also clarified that supplier of ITeS services, who is not an intermediary in terms of sub-section (13) of section 2 of the IGST Act, can avail benefits of export of services if he satisfies the criteria mentioned in sub-section (6) of section 2 of the IGST Act, which reads as under – 

"export of services‖ means the supply of any service when,–– 

(i) the supplier of service is located in India; 

(ii) the recipient of service is located outside India; 

(iii) the place of supply of service is outside India; 

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and 

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8"

To download the Circular  https://cbic-gst.gov.in/pdf/circular-cgst-107.pdf

Gift made to a Non-Resident will be taxable in India w.e.f 5^th July 2019

What is the amendment	Gift received by a Non- Resident (Individual/HUF/Co./LLP etc.) from a Resident (Individual/HUF/Co./LLP etc.) will be treated as Income deemed to accrue or arise in India, hence Taxable in the Hands of Non- Resident. [Source: newly proposed Section 9(1)(viii)]
What is Reason for amendment	Under the existing provisions of the Act, a gift of money or property is taxed in the hands of donee, except for certain exemptions provided in clause (x) of sub-section (2) of section 56. It has been reported that gifts are made by persons being residents in India to persons outside India and are claimed to be non-taxable in India as the income does not accrue or arise in India. [ Source Memorandum to Finance Bill (2) 2019]
Effective date of Amendment	With effect from 5th July, 2019 [ i.e. on or after 5th July, 2019]                           [ Source Memorandum to Finance Bill (2) 2019]
What constitutes Gift?	-       any sum of money, without consideration > 50K or -       any immovable property without consideration and Stamp Value of which >50K or -       any immovable property for a consideration and stamp Value of such immovable property is higher by either >50K or 5% of consideration than the actual consideration paid. or -       any property, other than immovable property without consideration whose aggregate fair market value > 50K or -       any property, other than immovable property for a consideration less than the aggregate fair market value of the property by an amount >50K [Section 56(2)(x)]
Exception	-       Gift from Relative of Individual/ HUF -       Gift on the occasion of the marriage of the individual etc. Will not be taxable in the hands of Non- Resident.   [Source Proviso to s. 56(2)(x) read with proviso to s.56(2)(vii)]                           [ Source Memorandum to Finance Bill (2) 2019]
Will DTAA be applicable?	Yes, in a treaty situation, the relevant article of applicable DTAA shall continue to apply for such gifts as well.     [ Source Memorandum to Finance Bill (2) 2019]